GoldCore Update: Gold Correction of Some 10% to $1,100 Level?

By IBT Staff Reporter On 12/07/09 AT 7:03 AM

Gold As expected, gold has continued its pullback of Friday overnight and this morning. Gold is currently trading at $1,139.40/oz and in euro and GBP terms, ir is trading at €772/oz and £697/oz respectively.

The speed of the sell off surprised some on Friday but volatility looks set to remain high and may even increase. The titanic battle between those long the market (many of whom are attempting to accumulate physical bullion) and those with more short term horizons who are short the market is set to continue. The longs have had the upper hand in recent weeks but the sharp sell off on Friday and the slightly lower weekly close did damage to gold from a technical point of view and could result in a further sell off this week. Support is at $1,100/oz and then at previous resistance $1,030/oz.

A sell off is likely to be sharp (as most sell offs in gold in recent years have been) and could even give up much of the gains seen in November (gold up 14%). Gold corrections have often been of the magnitude of some 10% in recent years and that would see prices fall from the recent high near at $1,226/oz to around $1,100/oz. However, it is likely that at the end of the year 2009, gold will still have again outperformed most other asset classes and remained in its secular bull market. A correction in gold may coincide with a much anticipated period of strength for the dollar and could see riskier assets such as commodities and equities come under serious selling pressure.

Silver Silver has been following gold and it also dropped overnight. Silver is currently trading at $18.05/oz, €12.20/oz and £11.02/oz.

Platinum Group Metals Platinum is trading at $1,436/oz and palladium is currently trading at $371/oz. While rhodium is at $2,425/oz.